1. COMPANY INFORMATION

The Company was originally incorporated as a private limited Company under the name of “Asarfi Hospital Private Limited” on October 04, 2005 under the provisions of the Companies Act, 1956 with the Registrar of Companies, Bihar & Jharkhand, bearing registration number as 011673. Thereafter, the Company was converted from private limited to public limited, pursuant to special resolution passed by the shareholders of the Company at the Extraordinary general meeting held on January 03, 2012 and the name of the Company was changed from “Asarfi Hospital Private Limited” to “Asarfi Hospital Limited” vide fresh certificate of incorporation dated February 08, 2012 issued by the Registrar of Companies, Jharkhand. The Corporate Identification Number (CIN) is U85110JH2005PLC011673 and its registration number is 011673.

The Company is coming out with its Initial Public Offer (IPO) fresh issue start from 17th July 2023 to 19th July 2023. The Company has made the allotment of 5180000 Number of Shares of face value of Rs 10/- for cash price of Rs 52/- per Equity Share (including share premium of 42/-) for the Initial Public Offering to the eligible applicants as per the Basis of Allotment on 24th July 2023.Its Primary listing on Bombay Stock Exchange on 26th July 2023.

The Company has its registered office at Baramuri, Bishunpur Polytechnic, Dhanbad 828130 Jharkhand.

The main objects to be pursued by the company to acquire establish & maintain one or more Hospitals for treatment of person suffering from illness or person requiring medical attention & also provide Primary Health Services & treatment as well as specialized super specialty health service.

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T o carry out medical research by engaging in the research & development of all fields of medical science and all system & in therapics of medical treatment so as to afford medical relief in a better way.

2. SIGNIFICANT ACCOUNTING POLICIES

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a. Basis of Preparation of Financial Statement -

These financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in India ('Indian GAAP') to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, as applicable. The financial statements have been prepared under the historical cost convention on accrual basis, except for certain financial instruments which are measured at fair value.

b. Use of estimates -

The preparation of financial statements requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and reported amounts of income and expense during the year. Examples of such estimates include provisions for doubtful receivables, provision for income taxes, the useful lives of depreciable fixed assets and provision for impairment. Future results could differ due to changes in these estimates and the difference between the actual result and the estimates are recognized in the period in which the results are known / materialize.

c. Property, Plant and Equipment -

i) Property, Plant and Equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation, and accumulated impairment loss, if any as per AS 10: "Property, plant and equipment" Historical cost comprises of the purchase price including duties and non-refundable taxes, borrowing cost if capitalization criteria are met, directly attributable expenses incurred to bring the asset to the location and condition necessary for it to be capable of being operated in the manner intended by management.

Subsequent costs related to an item of property, plant and equipment are recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are recognized in the statement of profit and loss during the reporting period when they are incurred.

ii) Capital Work-in-Progress

Directly attributable expenditure incurred on Construction of Capital Assets under progress are shown in the head of "Capital WIP ". At the point when Construction gets completed and the assets ready to use for business purpose then it is transferred /capitalized to appropriate category of Property, plant and Equipment's.

d. Depreciation / Amortization -

Depreciation/amortization is provided by using the written down value method over their useful lives as per Schedule II of Companies Act 2013 except the amortization of leasehold land which is amortized over the period of lease term as per straight line method.

Depreciation on additions to the assets and the assets purchased or disposed of, during the year is provided on pro rata basis, at their respective useful life or rate of depreciation as prescribed with reference to the date of acquisition/installation or date of addition/disposal thereof. The estimated useful life of assets is reviewed and where appropriate are adjusted, ^annual,y'

Freehold land is not depreciated

e. Impairment-

At each balance sheet date, the management reviews the carrying amounts of its assets included in each cash generating unit to determine whether there is any indication that those assets were impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment. A recoverable amount is the higher of an asset's net selling price and value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and from its disposal are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of time value of money and the risks specific to the asset. Reversal of impairment loss is recognized as income in the statement of profit and loss.

f. Investments -

Investments which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments.

Investments in subsidiary are classified as long-term investment and recorded at historical cost as per AS -13.

g. Revenue Recognition -

The company derives its revenues primarily from Health care services, Patient care services (including procedures such as surgeries and diagnostics imaging), and from appointments and related services. Revenue from services provided under fixed price contracts, where the outcome can be reliably estimated, is recognized based on contract activity.

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured in accordance with AS-9.

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Revenue from Sale of Goods: Revenue is recognized when it is earned, and no significant uncertainty exists as to its realization or collection.

Rendering of Services: -Revenue from hospital services to patients is recognized as revenue upon completion of services i.e only when services are competed or patients discharged and invoices are generated. Revenue is recognized net of discounts and concessions agreed.

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Canteen Income: - Add-on services providing food and refreshment are recognized on an accrual basis."

Interest Income: Interest income is recognized using the time proportion method, based on rates implicit in the transaction.

Other Income: Other Income is recognized based on the contractual obligations on an accrual basis.

h. Borrowing Cost -

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets as per AS -16 are considered as part of the cost of that asset till the date of the acquisition. Other borrowing costs are recognized as an expense in the period in which they are incurred.

Short-term benefits (salaries, wages, and leave encashment) are accounted for on an accrual basis.

Post-Employment Benefits:

Defined Benefit Plan: Gratuity liability is a defined benefit obligation and is unfunded. The Company accounts for liability for future gratuity benefits based on the actuarial valuation using Projected Unit Credit Method carried out as at the end of each financial year.

Defined Contribution Plan:

Contributions to defined contribution retirement benefit schemes are recognized as expense when employees have rendered services entitling them to such benefits.

Provident Fund: Eligible employees receive benefit from provident fund covered under the Provident Fund Act. Both the employee and the company make monthly contributions. The employer contribution is charged off to Profit & Loss Account as an expense.

ESI: Both the eligible employee and the company make monthly contributions. The employer contribution is charged off to Profit & Loss Account as an expense.

j. Earnings Per Share -

Basic earnings per share is computed by dividing the profit/ (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equities shares outstanding during the year.

Diluted earnings per share is computed by dividing the profit/(loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

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Potential equity shares are deemed to be dilutive only if their conversion to equity shares decreases the net profit per share from continuing ordinary operations.

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Potential dilutive equity shares are deemed to be converted as the beginning of the period, unless they have been issued at a later date.

The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares).

Dilutive potentially equity shares are determined independently for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted for share splits/reverse share splits and bonus shares, as appropriate.

k. Taxation -Current tax:

Current income tax expense comprises taxes on income from operations in India. Income tax payable in India is determined in accordance with the provisions of the Income Tax Act, 1961.

Advance taxes and provisions for current income taxes are presented in the balance sheet after offsetting advance tax paid and income tax provision arising in the same tax jurisdiction for relevant tax paying units and where the Company is able to and intends to settle the asset and liability on a net basis.

Deferred tax:

Deferred tax expense or benefit is recognized on timing differences being the difference between taxable income and accounting income that originate in one period and is likely to reverse in one or more subsequent periods.

Deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty, except arising from unabsorbed depreciation and carried forward losses, that sufficient future taxable income will be available against which such deferred tax assets can be realized.

Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

The Company offsets deferred tax assets and deferred tax liabilities if it has a legally enforceable right, and these relate to taxes on income levied by the same governing taxation laws. ¹

n. Inventories -

"Consumables includes In Patient Department (IPD) Stock are carried at Cost value, that is used for the consumption for patient in hospital.

Stock in trade includes Outpatient Department (OPD) Stock are carried at lower of cost and net realizable value.

Cost comprises purchase price and all incidental expenses incurred in bringing the inventory to its present location and condition.

The Company follows the FIFO method for determining the Cost of Inventories."

o. Provisions, Contingent liabilities and Contingent assets -

"A provision is recognized when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation at the reporting date in respect of which reliable estimate can be made.

Provisions (excluding retirement benefits and compensated absences) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

Where no reliable estimate can be made, a disclosure is made as contingent liability. A disclosure for a contingent liability is also made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources Contingent liabilities are not recognized in financial statements but disclosed in the notes to accounts.

A contingent asset is neither recognized nor disclosed in the financial statements."

p. Cash and cash equivalents-

Cash and Cash Equivalents include Cash on hand, Cheque in hand, Bank Balance, Bank Deposit with original maturity up to 3 months.

q. Cash Flow Statement -

Cash Flow is prepared using the indirect method as prescribe under AS 3: "Cash flow statement" whereby the profit before tax is adjusted for the effect of the transaction of the non-cash nature, any deferrals or accruals of past and future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flow. The cash flows from operating, investing, and financing activities of the company are segregated.

r. Related party transaction: -

Parties are considered to be related if at any time during the reporting period one party has the ability to control the other party or exercise significant influence over the other party in making financial and/or operating decisions as per AS 18 and section 2(76) of the company act 2013.

pricing of transactions is done at arm's length.

Transactions with related parties along with Balances with respect to each separate nature of transaction with each related party is disclosed in financial statements which required disclosure as per AS 18 or as per Section 177 of company Act 2013.

s. Segment Reporting -

A reportable segment is identified as a business segment, or a geographical segment identified on the basis of foregoing definitions for which segment information and required to be disclosed as per AS 17 "Segment Reporting.

A business segment or geographical segment is identified as a reportable segment if: (a) its revenue from sales to external customers and from transactions with other segments is 10 per cent or more of the total revenue, external and internal, of all segments; or (b) its segment result, whether profit or loss, is 10 per cent or more of - (i) the combined result of all segments in profit, or (ii) the combined result of all segments in loss, whichever is greater in absolute amount; or (c) its segment assets are 10 per cent or more of the total assets of all segments.

t. Subsequent Event-

Events which occur between the balance sheet date and the date on which the financial statements are approved, which indicate the need for adjustments to assets and liabilities as at the balance sheet date or may require disclosure are identified to determine the impact on financial statements.

Adjustments to assets and liabilities are taken for events occurring after the balance sheet date that provide additional information materially affecting the determination of the amounts relating to conditions existing at the balance sheet date.

u. Lease hold Land and lease Liability:

Lease hold Land: Lease hold land is capitalized at the cost of land which are payable as per lease deed as premium for Land to the lessor along with cost of acquiring the lease such as cost of registration, legal cost which are necessary to acquire the land on lease.

Present value/time value of money is not being considered while recognizing the lease hold land and lease liability.

Amortization Lease hold land: Lease hold land is amortized at straight- line method (SLM) over the period of lease or lease period including the extended period under renewal option where entity has renewal option at it is reasonably certained that entity will opt the renewal option.

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Lease Liability: Lease liability is recognized for cost of land which are payable per lease deed as premium for Land to the lessor without considering time value of money and classified as current liability which are expected to be settled within 12 months from the end of reporting period and noncurrent liability which are expected to be settled beyond 12 months from the end of reporting period.

Annual rent and Annual Maintenance charges: Annual Rent and maintenance charges are considered as revenue expenses and charge to profit and loss Account on accrual basis as and when it incurred.

Leasehold Improvements: If any improvements are made on the leasehold land, they are capitalized and amortized over the shorter of the lease term or useful life of the improvement.

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Foreign Currency -

Income and expenses in foreign currencies are converted at exchange rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities other than net investments in nonintegral foreign operations are translated at the exchange rate prevailing on the balance sheet date and exchange gains and losses are recognized in the statement of profit and loss. Exchange differences arising on a monetary item that, in substance, forms part of an enterprise's net investments in a nonintegral foreign operation are accumulated in a foreign currency translation reserve.

m. Forward Exchange Contracts:

The risks associated with changes in exchange rates mitigated by entering into forward exchange contracts. Any premium or discount arising at the inception of a forward exchange contract is accounted for separately from the exchange differences on the forward exchange contract. The premium or discount that arises on entering into the contract is measured by the difference between the exchange rate at the date of the inception of the forward exchange contract and the forward rate specified in the contract. Exchange difference on a forward exchange contract is the difference between (a) the foreign currency amount of the contract translated at the exchange rate at the reporting date, or the settlement date where the transaction is settled during the reporting period, and (b) the same foreign currency amount translated at the latter of the date of inception of the forward exchange contract and the last reporting date.